Japanese cosmetics company looks to expand its East Windsor plant

Employees of R&S Concrete and Paving, in Bristol, PA, work on the foundation of a factory expansion at the East Windsor location of Japanese cosmetics manufacturer Shiseido, located at the corner of Route 571 and Old Trenton Road.
Michael Mancuso/The Times

Japanese cosmetics company Shiseido is embarking on an expansion of its East Windsor plant that will boost production capacity by one-third and make the location the company’s sole U.S. export center.

However, the consolidation will come at a price for New Jersey’s job count. The East Windsor changes are happening in tandem with a gradual phase-out of a distribution center in Oakland, N.J., officials said.

Ed Houlihan, president and chief operations officer for Shiseido America, estimated 80 percent of the Oakland employees could lose their jobs. Based on a June Shiseido press release, the Bergen County plant had 135 employees. If that count is still accurate, the plant could lose 108 workers.

About 10 additional jobs in East Windsor are expected in the short term, and those would be offered to displaced Oakland workers, Houlihan said.

The East Windsor plant, on Princeton-Hightstown Road, employs 150 full-time workers and 150 temporary workers. Built in 2005, it serves as the headquarters for the company’s U.S. subsidiary, Shiseido America.

For years the Japanese economy has been sluggish, and the increasing frugality of consumers there has made for a difficult business environment. However, Shiseido is moving ahead with a multi-year plan to boost revenues in Japan and abroad, where sales have improved.

“That we can expand is good news for us,” said Ed Houlihan, president and chief operations officer for Shiseido America. “Europe is going through tough times, the Japanese economy is shrinking, and yet we’re anticipating further production increases.”

The East Windsor changes are part of a plan to reorganize Shiseido’s international and domestic distribution. The company will add some 73,000 square feet of space to an existing 211,000-square-foot structure, allowing production to be moved from Oakland.

The 460,000-square-foot facility is slated for a complete shutdown next year. The plant ships 12 million cases of product a year, according to the June release.

All of the company’s domestic distribution will be handled by a Shiseido plant in Columbus, Ohio. The East Windsor plant will remain the U.S.-based international export center.

The first phase of improvements will give the East Windsor plant more distribution capability and additional space for future production. During the second phase the additional production space will be put to use.

In the first phase, “the emphasis is mostly on cost savings, and we will save a lot of money,” Houlihan said. “But with phase two, we have a great opportunity to expand our business.”

Of the first 54,500 square feet to be added to the plant here, some 30,000 will be space for features that provide distribution capability. Preexisting loading docks will be moved inside and the current loading area will be expanded, Houlihan said.

Houlihan said Shiseido broke ground on preliminary construction last month, and hopes to complete the work by August. No date for starting up production in the new building has been scheduled.

Although only a handful of additional jobs can be expected in East Windsor, more job opportunities may develop later on, Houlihan said.

Houlihan agreed that any job gains in East Windsor would be offset by anticipated losses from the closure of the Oakland plant.

“Down the road, we may look at further synergy,” Houlihan said. “But the reality is, either way, we’re looking at plus-minus.”

New Jersey Department of Labor officials said they had not been notified of any pending layoffs at the Oakland facility but would help workers find new jobs in the event of a large-scale displacement. “When we hear a business is closing, our people want to get out there,” spokesman Brian Murray said.

The Oakland plant closure will further a state trend that has seen more than 260,000 state manufacturing jobs eliminated in the past two decades, according to the U.S. Bureau of Labor Statistics.

According to Shiseido’s 2012 annual report, the company had more than $8.2 billion in 2011 sales, making it the world’s third-largest cosmetics company. That achievement was helped in large part by its January 2010 acquisition of Bare Escentuals for $1.7 billion.

Global revenue grew by 2.5 percent in 2012, according to Yahoo! Finance. In Japan the company’s growth rate about matched that of the previous year, according to last year’s annual report. That expansion bucks a downward multi-year trend for luxury goods makers in Japan, where the economy is stagnant and still recovering from the Fukushima nuclear disaster in 2011.

In the June release, Shiseido said the product distribution changes combined with adjustments to administration and finance would help to “create a seamless, world class corporate, manufacturing and distribution platform in the U.S. that will benefit all of our brands in the region.”